Jetson Company sold 20,000 units of its only product and incurred a $50,000 loss (ignoring taxes)...

Jetson Company sold 20,000 units of its only product and incurred a $50,000 loss (ignoring taxes) for the current year as shown here. During a planning session for year 2012s activities, the production manager notes that the variable costs can be reduced by 50% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $150,000. The maximum output capacity of the company is 40,000 units per year. Jetson Company Contribution Margin Income Statement For Year Ended December 31, 2011 Sales$750,000 Variable Costs600,000 Contribution margin150,000 Fixed Costs..200,000 Net loss(50,000) Required 1. Compute the predicted break-even point in dollar sales for year 2012 assuming the machine is installed and there is no change in the unit sales price.

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Jetson Company sold 20,000 units of its only product and incurred a $50,000 loss (ignoring taxes) for the current year as shown here. During a planning session for year 2012’s activities, the production manager notes that the variable costs can be reduced by 50% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $150,000. The maximum output capacity of the company is 40,000 units per year.
Jetson Company
Contribution Margin Income Statement
For Year Ended December 31, 2011
Sales……………………………………………$750,000
Variable Costs……………………………………………600,000
Contribution margin………………………………………150,000
Fixed Costs………………………………………………..200,000
Net loss……………………………………………………(50,000)
Required
1. Compute the predicted break-even point in dollar sales for year 2012 assuming the machine is installed and there is no change in the unit sales price.

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